master of agribusiness kansas state university · to my parents baxter and leah fanwar, my husband,...
TRANSCRIPT
TRANSFORMING BELMONT ESTATE: A STRATEGIC PLAN
by
SHADEL NYACK-COMPTON
B.S., Howard University, 1986 J.D., Georgetown University Law Center, 1990
L.L.M., Georgetown University Law Center, 1992
A THESIS
Submitted in partial fulfillment of the requirements
for the degree
MASTER OF AGRIBUSINESS
Department of Agricultural Economics
College of Agriculture
KANSAS STATE UNIVERSITY
Manhattan, Kansas
2008
Approved by:
Major Professor
Dr. Vincent Amanor–Boadu
ABSTRACT
Transforming Belmont Estate from a traditional agricultural production business into a
profitable agri-tourism enterprise is the issue addressed in this thesis. The importance of
this problem rests on the fact that the author is the general manager of this family business
and needs to organize it in ways that facilitates its ability to keep growing in a rapidly
changing market environment. Given the increasing positioning of Grenada as a preferred
tourist destination and the increasing number of people who are responding to this
positioning, the management of Belmont Estate believes that transforming this traditional
agricultural production business into an agritourism business will create significant value
for shareholders and stakeholders.
The process of transforming the organization needs to start with a new way of envisioning
it. Therefore, a strategic direction and a compelling value proposition were developed. An
assessment of the business environment was conducted to develop a framework where
specific strategies could be developed to support the new strategic direction that has been
established. Additionally, a financial analysis that focused on the contribution of the
different enterprises to the new strategic direction was conducted to assess the potential
financial outcome of this effort.
The results show that Belmont Estate is well-positioned to benefit from increasing tourism
business in Grenada. If the management of Belmont Estate can implement the strategic
plan, it can successfully transform Belmont Estate from an agricultural production business
into an efficient agritourism business that not only creates value for its shareholders and
stakeholders but offers a welcome diversity to Grenada’s growing tourism industry.
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TABLE OF CONTENTS
List of Figures..........................................................................................................................v
List of Tables ..........................................................................................................................vi
Acknowledgments.................................................................................................................vii
Chapter I: Introduction .........................................................................................................1
1.1 Rationale .......................................................................................................................1
1.2 Hurricane Ivan’s Effect on Belmont............................................................................2
1.3 The Agri-tourism Enterprise ........................................................................................4
1.4 Research Problem.........................................................................................................6
1.5 Thesis Objectives .........................................................................................................6
1.6 Methods ........................................................................................................................7
1.7 Outline of the Thesis ....................................................................................................9
Chapter II: Strategic Direction and Business Environment ...........................................10
2.1 Introduction ................................................................................................................10
2.2 Economics of Agritourism.........................................................................................10
2.3 Strategic Direction......................................................................................................20
2.4 The Organization........................................................................................................23
2.5 Value Proposition .......................................................................................................30
Chapter III: Market and Functional Analysis..................................................................32
3.1 Introduction ................................................................................................................32
3.2 Market Analysis..........................................................................................................32
3.2 Organic and Specialty Foods Markets.......................................................................34
3.3 Analysis of Porter’s Five Competitive Forces...........................................................37
3.4 Functional Analysis....................................................................................................40
3.5 The Market Gap and Opportunities ...........................................................................41
3.6 Principal Objectives and Strategy by Functional Area .............................................42
3.6.1 Food Production ................................................................................................43 3.6.2 Guest Services ...................................................................................................47 3.6.3 Sales and Marketing..........................................................................................48 3.6.4 Customer Service and Support .........................................................................49
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Chapter IV: Financial Projections .....................................................................................52
4.1 Introduction ................................................................................................................52
4.2 Assumptions ...............................................................................................................52
4.3 Financial Projections ..................................................................................................55
Chapter V: Summary and Conclusion...............................................................................62
References..............................................................................................................................64
v
LIST OF FIGURES
Figure 1.1: The Strategic Visioning Cascade® ...................................................................8
Figure 2.1: Demand and Supply Forces in Agritourism Ventures in Grenada............17
Figure 2.2: Contribution of Agricultural Production and Tourism Industries to
Grenada’s Economy (1997-2007)........................................................................................19
Figure 2.3: Belmont Estate Organizational Chart ...........................................................28
Figure 2.4 Belmont Estate Organogram............................................................................29
Figure 3.1:Value Chain Model............................................................................................41
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LIST OF TABLES
Table 4.1 Pro Forma Income Statement Projections – Agriculture 2008 – 2017 .........57
Table 4.2 Pro Forma Income Statement – Tourism – 2008 – 2017 ................................58
Table 4.4 Pro Forma Balance Sheet Projections – 2008 – 2017....................................60
Table 4.5 Pro Forma Cash Flow Projections – 2008 – 2017.........................................61
vii
ACKNOWLEDGMENTS
The author wishes to acknowledge God, and thank Him for making this degree
realizable, and for successfully taking me to this final step. You made a clear path for
me throughout this entire journey, despite many challenges. Truly,” with God all
things are possible.” Matt: 19: 26.
To Dr. Vincent Amanor – Boadu, my major professor, thank you for directing me
through this monumental task of formulating a strategic plan for my company. I
know that for you – as for me - this is much more than an academic exercise, and you
genuinely intend to ensure that this plan is perfected and executed. How can I ever
adequately thank you for your guidance, your advice, your genuine concern for my
personal success and that of Belmont Estate? You have been an inspiration, mentor,
example and a motivation to me. I know that my gratitude to you will best be
demonstrated in the realization of what we have laid out in this thesis.
To the faculty and administration of this special MAB program, I thank you for
creating this ingenious program and for allowing me the opportunity to study and
achieve this degree in Agribusiness. It will facilitate the growth, development and
success of our business. I am tremendously grateful to Lynnette Brummett, Mary
Bowen and Meagan Cramer; your kindness, understanding, and accommodation
were sincerely appreciated and have helped to bolster my performance and ensure
my successful completion.
viii
To my parents Baxter and Leah Fanwar, my husband, Jerry Seales and my brother,
Travis Compton, thanks for your continuous love, support and encouragement. You
have all been pillars of strength in my life. Travis, your presence at my graduation
spoke volumes and I am humbled and grateful. To my management and
administrative staff of Belmont Estate, thanks for executing your work so well, thus
allowing me the time away from Belmont to complete this degree. To Paula Lewis and
Vicky Facey, I owe you! Heartfelt thanks!
I dedicate this thesis to the people of Belmont Estate. I am confident that together we
will transform the business to all that we plan for it to be.
Thank you!
1
CHAPTER I: INTRODUCTION
1.1 Rationale
Belmont Estate results from the French plantation system that was popular during the early
days of colonialism in the Caribbean. Belmont dates back to the late 1600s and changed
ownership from French aristocrats to Scottish and English aristocrats until it was purchased
by my grandparents, Norbert and Lyris Nyack, in 1944. They were both descendants of
East Indian immigrants and were the first persons of East Indian descent to purchase an
estate on Grenada. The novelty of this is reflected in the fact that only Europeans owned
agricultural estates on the island at that time.
Belmont Estate was the first of six estates owned by my grandparents. Simple people with
no business background or formal education, they were able to utilize their innate business
aptitude to maximize the opportunities of the times. They succeeded in establishing and
expanding their business’ profitability and maintained market share for many years. They
ventured outside of the plantation industry to purchase and operate several commercial
properties and enterprises in Grenada. For example, for several years, they owned and
managed a horse-racing track.
After both of my grandparents died, most of the businesses were sold and over time, the
only business of my grandparents that remained in the family is Belmont Estate. However,
Belmont Estate’s survival is threatened by the significant changes that are occurring in
Grenada and in Grenada’s economy. The mantle has now been passed on to me and I see it
as my duty to family and to the memory of my grandparents to resuscitate, preserve and re-
establish the prominence, respect, identity and profitability of the last remaining vestige of
2
the family history – Belmont Estate. But my decision to preserve this estate and expand
our business goes beyond duty. Among the other reasons driving my desire to transform
Belmont Estate are as follows:
• Pay tribute to the legacy of my grandparents who struggled tirelessly to create this
successful business enterprise,
• Document and showcase the estate’s and plantation history as an important
component of the our island’s past,
• Help sustain the community’s economic stability through the provision of
employment to its people and opportunities for its businesses through supply and
service agreements, and
• Make a contribution to the social fabric of the community through the mobilization
of citizens to engage in the transformation of the wealth status of the community.
1.2 Hurricane Ivan’s Effect on Belmont
Although historically a sugarcane estate, Belmont Estate currently produces mostly
nutmegs and cocoa along with small quantities of fruits and vegetables. Belmont Estate
also serves as a buying agent for cocoa from farmers on behalf of the Grenada Cocoa
Association – the statutory body empowered by government to purchase all cocoa on the
island. Belmont Estate has received organic certification and currently has a strategic
alliance with the Grenada Chocolate Company in the nearby village of Hermitage, to
provide the chocolate factory with organic cocoa for the production of organic dark
chocolate.
3
The transformation of Belmont Estate started in April 2002 with the integration of local
culture, history, traditions and cuisine of the island into agricultural production. This
initiated the agritourism enterprise of the company, seeking to achieve recognition among
tourists and locals alike as an agritourism destination. The idea was to offer visitors a
unique perspective of Grenadian agricultural and food processing life in situ and help
visitors see the value-added initiatives that were being implemented at Belmont Estate.
Although nascent in every sense of the word, the agritourism business was averaging
between 1,500 and 1,800 guests per month between its opening and September 2004.
In September 2004, Hurricane Ivan—a category 4 hurricane—came through Grenada. It
devastated the majority of the island, leaving many people homeless and destroying many
of the country’s tourism facilities and resources. Belmont Estate was not spared this
destruction. All of our tourism facilities were destroyed, and the Estate was forced to close
the tourism component of the business. Additionally, most of our agricultural production
and processing facilities were also destroyed. For example, Hurricane Ivan severely
destroyed and damaged field crops, cocoa and nutmeg trees as well as fruit orchards, forest
and wind breaks. Our nutmeg fields were hit hard with the hurricane toppling or uprooting
mature and fruit-bearing trees as well as trees ready for harvest and saplings. Our cocoa
plantation was also seriously affected, registering damages to trees grown on our 150 acres
of organic certified lands, as well as the trees that were intercropped with the cocoa. There
was also severe structural damage to our cocoa fermentary, cocoa drying trays, animal
houses, greenhouses and nurseries. The hurricane wiped out almost all our bananas.
However, bananas have not been an important crop at Belmont because of many years of
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decline of the industry at the national level. Forty percent of our ten acre orchard, which
comprised mangoes, oranges, grapefruit, golden apples, sapodillas, cherries, sugar apples
and soursop, was completely destroyed while 100% loss was sustained in our vegetable
operations. On the contrary, we only suffered minor losses in our spice enterprise, such as
cinnamon, cloves, and pimento. For example, we only lost about 37 percent of our clove
stock and our cinnamon and pimento trees suffered only broken branches.
We may look at the massive destruction Hurricane Ivan unleashed on Belmont Estate from
a positive perspective: It allowed us to re-imagine the possibilities of Belmont Estate by
redesigning everything from ground up. For example, we have invested about U.S. $1.2
million in the rehabilitation of our agricultural fields and the re-construction of the
buildings and other infrastructure. Indeed, we were able to resume our agricultural
operations immediately after the hurricane. However, we noticed a 50 percent drop in our
agricultural production, leading to a corresponding loss of revenue and forcing us to
continue rethinking how we can make Belmont Estate successful in the new reality.
1.3 The Agri-tourism Enterprise
Belmont Estate re-opened as a tourism destination in January 2007, beginning with tour
offerings. The Estate provides a unique opportunity for visitors to explore the fascinating
story of cocoa, from the field to the fermentary, learning of the earliest and most primitive
methods of processing to its present-day modern systems. Its pictorial displays and antique
machines lend an added touch to the experience. The tour not only tells the story of cocoa,
but guests visit numerous gardens, participate in the activities on the estate, witness cultural
5
performances and entertainment, and also interact with the various farm animals and
wildlife that are full-time residents on the Estate.
The highlight of the tour is the 250 seat authentic Grenadian restaurant that opened fully in
June of 2007. It offers local plantation-style food served in exquisite, rustic and yet a
comfortable dining environment. It has become one of the best destinations for local
Grenadian Creole cuisine and has been recognized for its outstanding service. In March
2007, our produce market started selling fruits and vegetables, as well as confectionaries
such as chocolate and other value-added products produced on the Estate. We expanded
our offering by adding a 100-person capacity conference room to attract conference events
and seminar groups. In May 2008, we added a small café to provide quick snack and
beverage services to visitors who did not want to experience the sit down restaurant milieu.
We have rebuilt our heritage museum which houses artifacts dating back to Carib and
Arawak period and covers historical artifacts and documentation from the eras of slavery,
plantations, the Grenada revolution and more. The uniqueness of the collection increases
Belmont’s appeal to tourists and other visitors and contributes a significant portion to the
Estate’s income.
We worked with a local credit union, the Grenville Co-Operative Credit Union, to open a
branch at Belmont Estate last year. This branch serves the rural communities and offers
financial services to Belmont Estate’s employees and small farmers unable to get financial
services from traditional institutions. This has set up Belmont Estate as a destination for
6
local people who come to the Estate to sell to the Estate and conduct their financial
businesses at the local credit union.
1.4 Research Problem
We are in the process of re-positioning Belmont Estate as a major tourism destination,
focusing on the agritourism niche which is currently lacking on the island. We are
positioning ourselves as an educational center with our cocoa production and processing
demonstration facilities as well as our conference facilities. We are adding new initiatives
to our operations in an attempt to lift Belmont Estates to its glorious historic position.
But, it is important to for us to ask if these activities make economic and financial sense in
their scale and scope. We need to determine the contributions of the different enterprises to
our overall profitability so that we can ascertain the potential return on investment for each
enterprise to help us effectively use funds and other resources.
The problem that we seek to address in this thesis is to develop a strategic plan that allows
us to execute strategies that maximize the return on investment from our activities at
Belmont Estate. We do this within the context of our history and our sense of direction of
the future and an unflinching desire to improve the well-being of our shareholders,
stakeholders and others who depend on our success for their livelihood.
1.5 Thesis Objectives
The overall objective of this thesis, therefore, is to develop a strategic plan for Belmont
Estate that allows it to transform itself from a primary agricultural production company into
7
an integrated agritourism company that fully utilizes its agricultural resources. The specific
objectives are as follows:
1. Develop a strategic direction for Belmont Estates that allows it to distinguish itself
in the highly competitive tourism industry in Grenada,
2. Evaluate the competitive market environment confronting Belmont Estate and
assess how its diverse resources allows it to differentiate itself in the Grenada
marketplace,
3. Conduct a financial analysis of the integrated agritourism business to determine the
organizational structure that must be implemented to facilitate success in the
shortest possible time, and
4. Describe an implementation plan to allow management to deliver the results
described in the plan to shareholders and other stakeholders.
1.6 Methods
Developing a strategic plan is a creative activity that requires developing a perspective of
the business from the point of view of its future. The most effective approach to doing this
is the Strategic Visioning Cascade® developed by Dr. Vincent Amanor-Boadu. The
Cascade® employs a systematic process to identify the strategic direction of the
organization and develop operational strategies to move the organization to the destination
established in the strategic direction. We, therefore, employ the Cascade® to envision the
future of Belmont Estate and develop the appropriate strategies to help achieve that future.
8
Figure 1.1: The Strategic Visioning Cascade®
Strategic Direction
Operations
Mandate
Vision
Mission
Core Values
Objectives & Goals
Strategies
Action Plan
Customers, Accountabilities
& Responsibilities
The Cascade® (see figure 1) is grounded in systematic analysis of the business and
industry environment in which the organization operates. Therefore, we an conduct
organizational and industry analysis, drawing on the statistical and strategic initiatives of
suppliers, competitors, governments and customers to understand the trends and directions
of demand and supply. These analyses allow us to develop clearer perceptions of the
environment in which Belmont Estate is operating and facilitates the development of clear
and compelling strategies to achieve the desired transformation.
9
We also conduct financial projections based on clearly stated assumptions about the
business that are drawn from the business and industry analyses. The results of these
analyses help in the development of the appropriate structures to support the achievement
of the strategic direction established for the company. The execution plan for the strategy
evolves directly from these analyses and defines the resources that are necessary to achieve
the desired transformation.
1.7 Outline of the Thesis
We present the new strategic direction of Belmont Estate in Chapter 2 along with the
business and industry analysis. We also provide an overview of the economics supporting
the transformation of the business from its traditional agricultural production focus to an
agritourism focus in Chapter 2. In Chapter 3, presents execution strategies and the resource
requirements for achieving the specified vision. Chapter 4 we present the assumptions that
drive the financial projections and analyses as well as the projections and analyses of
associated finances from the business. Chapter 5 presents a summary and conclusion of the
research and identifies some of the challenges that stand in the way of achieving the
objectives specified in the plan and how they may be overcome.
10
CHAPTER II: STRATEGIC DIRECTION AND BUSINESS ENVIRONMENT
2.1 Introduction
The economics of agritourism is presented in the first part of this chapter with the view of
determining the context within which Belmont Estate may develop its strategic thrusts. In
the second part of the chapter, we provide an analysis of the market environment
confronting Belmont Estate as it transforms itself from a primary agricultural producer to
an integrated agritourism business. The third and final part of the chapter provides the
strategic direction of Belmont Estate. It specifies the vision, mission, and core values as
well as the organization’s value proposition in this new environment.
2.2 Economics of Agritourism
Tourism is traveling for the purpose of recreation or leisure and covers the services that
support these activities. Agritourism is a subset of an emerging segment in the tourism
industry referred to as destination tourism in which people travel to specific locations to
enjoy specific activities related to those locations. Thus, agritourism ventures provide
recreation, leisure, entertainment and/or educational products and services to the visiting
public.
Agritourism is growing rapidly at an estimated annual growth rate of 6 percent in Europe
and North America (Tchetchik et al. (2008). While developed countries such as Canada,
U.S. and European countries are aggressively promoting agritourism as a value-added
initiative for producers to improve their incomes, developing countries have not yet
discovered this innate opportunity to expand their tourism opportunities and incomes. This
is not surprising since many producers in developing countries are not educated enough or
resourced adequately to position their businesses in ways that can be attractive to tourists
11
interested in agriculture and related industries. The opportunities in agritourism can be
significant. For example, the annual proceeds from agritourism in England amount to $14
billion, providing employment for 380,000 people (Arnold 2004) while the industry
accounts for 3% of the rural labor force in Canada (Bollman 2005). Brown (2005) points
out that between 2002 and 2004 in the United States, a reported 90 million adults took trips
to rural destinations. And Tchetchik et al. (2008) indicate that roughly 10 percent of rural
households in northern Israel are involved in rural tourism.
The development of agritourism in developed countries has not emerged solely as a result
of market forces. Governments have been very aggressive in their support for producers
seeking to undertake such ventures. For example, the EU has allocated a budget of $17
billion from 2007 to 2013 to support agritourism (Bendz, 2004). Additionally, government
policies, such as special zoning, infrastructure development (e.g. transportation and
communication, and financial incentives enrich the countryside environment and promote
agritourism) (Gartner 2004). Not many developing countries, such as Grenada, can afford
the support that developed countries give to their agricultural producers to undertake
agritourism ventures.
Growth in incomes – including disposable incomes – and significant reduction in
transportation costs account for the accelerated growth in agritourism. Additionally, rapid
transfer of information around the world due to information technology developments have
caused significant awareness about production and practices and their effects on the
environment, human rights and animal welfare, causing some consumers to demand more
accountability in the food production process. This has not only increased visits to farms to
12
learn more about production but has contributed to the success of such companies as Whole
Foods Market in the U.S. But on the supply side, globalization and competition has caused
some producers to seek alternative sources of income to supplement their declining real
incomes from farm production.
Nickerson et al. (2001) conducted a principal component analysis and identified three
factors motivating agritourism ventures by producers: social reasons, economic reasons,
and external influences. Their cluster analysis showed that 61 percent of producers
undertook agritourism for economic reasons while 23 percent did it for reasons external to
their farming operation. However, Mace (2004) showed that income or economic reasons
are not as important a motivation for agritourism ventures as are socio-cultural factors as
meeting people and educating non-farm public about agricultural production.
Another reason supporting the increasing interest in agritourism is an increase in demand
by consumers for locally-grown foods and consumers’ need to know where their food
comes from and how it is produced. Indeed, there is emerging a class of consumers
referred to as ‘localvores’ who are interested principally in the consumption of food
products that are produced no farther than 100 miles from them. Localvores are committed
to eating and learning about food grown within their food shed. They see multiple benefits
of eating food grown close to home and will travel to different locations to experience the
food within their food shed.
Following the example of the European and American forerunners, the Caribbean has
finally come on board the agri-tourism band wagon. Initially being touted as the destination
13
of sand, sea, sun, and fun; the Caribbean tourism strategists soon recognized the challenge
to broaden and diversify its product to compete in the global marketplace, by offering a
more tangible, meaningful, and wholesome vacation experience. The values of world
travelers have changed, precipitating the re-focusing of Caribbean product development.
Travelers have become more sophisticated, educated, culturally aware and sensitive to the
social and physical environment, and politics of the host country. Of course, they still want
to be able to enjoy the more conventional aspects like warm weather, food, and beaches,
but by and large, they may want to enjoy a more positive and participative social and
educational experience.
The agricultural industry in the Caribbean has also had some changes in trends. Historically
known for its sugar, banana, and cocoa production, the export-centered agriculture based
on sugar and bananas has been threatened because of free trade challenges and the removal
of market protection privileges previously enjoyed by the region. The reduction in some of
the international markets, and the stiffening of competition, has led to decreased production
for export and diversification into fruit and vegetables, mostly for the domestic market. In
addition, environmental and climatic changes have resulted in increased droughts,
hurricanes and floods, negatively impacting agricultural production.
With the trend towards domestic food security, satisfying the demands at home, and
satisfying the tourists discerning demands for local food products, agriculture in the
Caribbean needs to focus on diversification to contribute more products and services to the
growing tourism market. Economically, this would enhance employment, reduce the
14
growing bill for food import and foreign exchange outflows, improve food security and
increase the importance and visibility of agriculture in national development.
The region is blessed with an authentic tourism atmosphere. The natural environment,
warm weather, sand, sea, sun, clean air, vegetation, and varied ecosystems are all benefits
to be capitalized upon in the growing tourism tendencies. The natural physical attributes
required for a fledging agricultural economy are supportive of a dynamic tourism
environment, resulting in a symbiotic relationship of the two industries.
The demand and supply conditions, therefore, of agritourism are determined and influenced
by consumers, producers and governments as well as natural phenomena such as
hurricanes. We may see governments as shifting the demand and supply curves using
policy instruments that provide incentives to producers to supply agritourism products and
services or to consumers to encourage their consumption of these products. But because
the Caribbean tourism market is significantly dependent on the U.S. market for its demand,
an economic downturn in the U.S. is expected to have adverse effects in the region,
including Grenada. The Eastern Caribbean dollar is tied to the US dollar. The strong pound
and euro against the U.S. dollar not only attracts visitors to the U.S. from Europe, but
shows similar results in the Caribbean, as European travelers, especially the British have
shown rising numbers of visitors to Grenada in recent years. It is forecasted that this trend
will continue as long as the euro and pound remain strong. While global tourism has been
growing at 7 percent per annum over the past several years, visitor numbers in the
Caribbean are rising by just 1% a year (Jacks, 2008). This would seem to suggest that the
Caribbean is not the premier choice destination. This could be as a result of the worldwide
15
competition with other island destinations, and the fact that the weakening U.S. dollar has
resulted in the less travel to the Caribbean by Americans. Thus, a prolonged economic
downturn in the U.S. could spell significant woes for the Caribbean’s tourism industries.
Figure 2.1 shows the equilibrium market conditions as well as the anticipated shift forces in
the demand and supply of agritourism in Grenada which depends on foreigners for its
tourism dollars. In the figure, we define demand for tourism (and the special case of
agritourism) as a function of government policies in the supply country, natural disasters
such as hurricanes in the supply country, the exchange rate between the visitors’ country
and the supply country, terrorism threats in both supply and visitors’ countries and the
general state of uncertainty experienced by tourism consumers. We can expect the first
order conditions vis-à-vis the demand for tourism to take the signs presented in Equation 1.
For example, when government policies (G) supporting tourism and agritourism increase
(e.g., ease of visas, tax relief, etc.), we can expect the demand for tourism to increase,
shifting demand curve to the right (i.e., D`) in Figure 2.1. On the other hand, an increase in
the exchange rate (X) of the tourism destination vis-à-vis the visitor’s country will make
tourism more expensive for the tourist and shift the demand curve to the left (i.e., D``) in
Figure 2.1. Similarly, we expect terrorism acts (T) in either country to shift demand to the
left and dampen demand for tourism. This is because consumers will feel their safety
threatened and seek to remain close to home. An increase in economic uncertainty ( U ) —
such as the tightening credit that is being observed in many developed countries
currently—will make consumers nervous and limit their enthusiasm to consume tourism
products, hence the negative first order condition.
16
0
0
0
0
0
D
D
D
D
D
dQdGdQdXdQdT
dQdNdQdU
>
<
<
<
<
Equation 1
A similar assessment can be performed on the supply side. For example, government
support for tourism providers can reduce their costs and encourage them to increase supply,
thereby reducing the price to consumers and increasing consumption in the process. Like
consumers, any natural disaster (U) will shift the supply curve to the left (S`) because
hotels, roads and other industry supporting infrastructures are often destroyed in these
disasters. It often takes some time for them to be rebuilt, and in the mean time, the
shortage often leads to increased prices. This could make a location uncompetitive against
others in the region and threaten the sustainability of the industry if conditions are not
addressed quickly.
17
Figure 2.1: Demand and Supply Forces in Agritourism Ventures in Grenada
The producer and consumer surpluses under the different conditions may be different and
influence consumer perceptions of value associated with a particular destination. In light of
this, it is important for Belmont Estate’s management to recognize the importance of
maintaining vigilance about these external forces that influence its ability to sustain its
competitiveness in the global marketplace of agritourism and develop the appropriate
strategies to minimize any adverse effects that may emanate from their occurrence.
18
It can be expected that the growth in agritourism in North America and Europe will
spillover to other locations such as traditional tourism destinations such as the Caribbean.
As North American and European consumers who seek agritourism adventures look for
bundles to maximize the value associated with each tourism dollar they spend, there is an
opportunity for destinations in idyllic locations such as Grenada to offer these consumers
experiences that may not be present in their domestic markets.
Unlike Europe and North America where agriculture is a relatively small segment of the
economy in comparison with tourism, the situation in Grenada is different because the two
industries are comparable. However, in line with the discussion of the external forces
influencing the performance of the industry, we observe in Figure 2.2 that the value
contribution of tourism to Grenada’s GDP had already surpassed agriculture in income by
1998 and continued to climb until the year 2001, after which the income from tourism
declined. This was largely because of the effects of the terrorist actions in the United States
on September 11, 2001, resulting in a considerable decrease in tourist travel from all
regions except from the Caribbean. It took about five years after the terrorist attack in 2001
for the tourism industry in Grenada to climb back to its pre-2001 levels. On the other hand,
the effects of Hurricane Ivan did not last as long even though it did affect revenues
generated by the industry. The recovery for the tourism industry has been more immediate
and easier to accomplish than for agriculture. Hotels, restaurants, and other tourism
enterprises have been mostly reconstructed and operational. On the other hand, recovery in
the agricultural industry after Hurricane Ivan has been much slower while the 9-11
terrorists’ action in the U.S. had no effect on agriculture. For example, while hotels can be
19
built and roads reconstructed, crops such as cocoa and nutmegs require between five and
fifteen years for new trees that have been replanted to reach full harvesting potential.
Diversification to short crops has not been very successful in raising the income to pre-Ivan
numbers. Tourism income has climbed steeply since 2005 overtaking agriculture’s income
in 2007. This trend is expected to continue, barring another natural, economic or other
disaster. This underscores the importance of external forces on the performance of the
industry and the ability of firms to execute their strategies.
Figure 2.2: Contribution of Agricultural Production and Tourism Industries to Grenada’s Economy (1997-2007)
Source: SATAP Mission, March 2008.
But the sustained growth of the tourism industry is dependent on the economic conditions
in the U.S. as well as the weather. Understanding the forces influencing demand for
tourism in Grenada facilitates an appreciation of the challenges and the opportunities that
confront Belmont Estate as it expands its operations to include agritourism. It allows
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management to appreciate the organizational structure—the mix of enterprises and
services—it must put in place to minimize the exposure of the business to external shocks
that are completely outside its control.
2.3 Strategic Direction
According to Amanor-Boadu (2003), strategic direction encompasses the organization’s
vision, mission and the core values that guide decisions and actions in the organization. He
argues that when used effectively, the strategic direction can allow an organization to build
and boost morale, attract and retain committed employees and get them to go beyond
themselves to contribute to something bigger than themselves. When well articulated,
orchestrated and implemented, the strategic direction can help make managing and
directing the organization relatively easy by helping staff develop a clear sense of their role
in the organization’s mandate, the fulfillment of its mission and achievement of its vision.
It can also reduce ambiguity in decision-making and behavior by clarifying the core values
and minimizing any deviations from them.
The vision is the driving force that determines what the organization will be recognized for.
We may think about the vision as the response to the following question: “Ten years hence,
describe what this organization has achieved to warrant receiving international recognition
from an influential international body. What did we do?”
Belmont Estate sees itself in ten years as the premier destination of choice of the discerning
agritourism consumer. We believe that by working towards this vision, we will build
loyalty among our customers and reduce the impact of the external variables – exchange
rates, terror threats, etc. – on our business. The focus of all of the organization’s strategies
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and activities is to achieve the vision. Amanor-Boadu (2007) uses the metaphor of a river
to hammer home the idea of the vision: the river’s vision is to empty itself into a larger
body of water.
The mission is the first thing that needs to be accomplished if the vision is to be a reality. It
is seen as the primary impediment to achieving the vision. It tends to have a shorter
lifespan than the vision and is attacked more aggressively. It is also from the mission that
the broad objectives emerge. We believe that Belmont Estate’s mission is to structure its
offerings to be attractive to a broad range of tourism consumers, especially local
consumers. Most tourism organizations on the island have an externally-focused strategy.
As such when there is a shift in external variables as have been discussed, it leads to
significant adverse effects on them. Belmont Estate seeks to minimize the effects of these
external variables by diversifying its customers to include both domestic consumers and
foreigners. The focus on this mission will become clear in the discussion on strategies.
Core values specify minimum value standards that guide actions and behavior of the
organization’s people. They define the boundaries within which decisions are made within
the organization. They allow directors to define policies and evaluate staff and provide a
road map in reaching decisions about alternatives. The simple question that is asked is this:
Which alternative gets us to the vision quickest within the constraints of our core values?
At Belmont Estate we have inherited a strong company, with values that have been shaped
by my family’s traditions and ideals for over sixty years. It is important that management
and staff have a clear understanding of those values, to help fulfill the obligation we have
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to preserve and enhance what we have inherited, and to achieve our mission and vision.
Common values will result in stronger relationships among our staff. Management,
employees, customers and other stakeholders are better focused and have a clear
understanding of their individual responsibility to all the players. Values jointly shared also
provide a structure for decision making, encourage constructive patterns of behavior and
delineate avenues for personal and business success (Senge, 1995). In terms of the
succession of the company, it permits us to pass on a company that continues to reach its
highest potential for future generations of employees and shareholders.
Our values encompass our faith, our people, our environment and our community. We
define faith broadly to encompass our belief that all things work for those who commit
themselves to good causes. Ours is a good course not only for our family, but also to our
shareholders, stakeholders and the community. We will surround ourselves with people
who share this value of commitment to good courses and work hard to make our
commitment yield tangible and palpable fruits.
We know our employees make the difference in whether we succeed or fail. Therefore, we
shall honor them and treat them with every respect even as we demand of them to treat
each other with utter respect and honesty. For we know that when we can create a
community in which people are valued and respected for their contribution to the bigger
picture, we shall expand the pie and make it beneficial for all.
We depend on the environment for our livelihood. Therefore, we shall protect the soil,
wildlife, livestock, plants and rivers and streams that have been entrusted to our care. We
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shall be good stewards of these environmental resources and work together to develop a
strong, coherent and transparent attitude towards its protection. We believe that when our
customers see this commitment to protecting the environment, they will join with us to
contribute to making a difference in the life of the world. In joining with us in this effort,
we connect to them on more than one dimension, which is what doing well by doing good
is all about.
We live in a community of people who care about us and share our history and our destiny.
Therefore, we shall endeavor to operate our business in ways that support the aspirations of
the people we share this community with, seeking to elevate them and encourage them to
reach for higher expectations for themselves and for each other. We know that when we
take care of each other in our communities, we shall build human communities that are
sustainable and enduring.
2.4 The Organization
The Belmont Estate group of companies specifically referred to in this proposal includes
the companies Nyack and Company Limited and Belmont Plantation Company Limited.
Nyack and Company Limited was incorporated on 6th August 1998 as Company no 85 of
1998-2903 under the Companies Act of Grenada. It owns and operates the Belmont Estate
farm. This approximately 400 acre estate includes two properties owned by Nyack &
Company - the 200 acres in the Belmont, Hermitage area of St. Patrick consisting mostly
of the organic cocoa cultivation , and another two hundred acres situated in Coubarrie,
Upper and Lower St. Johns areas of St. Andrew, consisting mainly of nutmeg cultivation.
The sister company, Belmont Plantation Company Limited was incorporated on the 22nd
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of November 2002, as Company no 106 of 2002 – 3499. This company is responsible for
the tourism operations, to include the restaurant, tours, produce shop, cultural
entertainment, museum and other subsidiary activities. Both companies work jointly,
Nyack & Company Limited in the farm operations, and Belmont Plantation Company
Limited in the tourism sector operations to create the agri-tourism business known and
marketed as Belmont Estate. The farm operations are divided into the organic cocoa
production, cocoa processing, nutmeg production, fruit and vegetable production,
horticulture, nursery and plant production and value added product production. The farm
manager oversees the entire farming division of the business, while the various departments
within the farming division are supervised by team leaders that report directly to the farm
manager. The tourism department of the business is comprised of the following entities: the
restaurant, café and museum, tours and conference facilities. The restaurant and café are
managed by the restaurant manager, while the marketing manager manages the conference
facilities, tours and the museum. The marketing manager is responsible for marketing all of
the tourism enterprises, while the farm manager is responsible for marketing the
agricultural produce.
The boards of directors of both companies consist of the owners, Shadel Nyack Compton,
Travis Compton and Leah Fanwar. The board’s primary responsibility is to determine the
strategic direction of the company and to guide in the execution of business strategy.
Shadel Nyack Compton is also the general manager of the business, and her qualifications
are listed with the management personnel. Travis Compton is a commercial airline pilot
25
with over twenty years experience and is also the sole proprietor of a retail clothing
business and partner of an airline consulting business. Leah Fanwar is retired.
The key management personnel are as follows: Shadel Compton Nyack heads the team of
Nyack and Company’s management personnel. She holds a Bachelor of Science Degree in
Psychology and Political Science from Howard University in Washington D.C, U.S.A.;
Juris Doctor’s Degree and a Master’s Degree in International Law from Georgetown
University in Washington, D.C. and a Certificate in Legal Education from Hugh Wooding
Law School, at the University of the West Indies, St. Augustine Campus. She is licensed to
practice Law in Grenada and St. Lucia in the West Indies and New York, Maryland and
Washington D.C in the United States. Currently Ms. Nyack Compton holds a Masters
Degree in Agribusiness Kansas State University in the United States. She will be
completing her Masters Program in 2008.
Vicky Facey joined the team in March 2008 from the UK. Specializing in business
management, Vicky has a proven 20 year track record of project and business management
at a senior level. She has extensive experience of event management worldwide and is
skilled at analyzing and initiating efficient business management systems and procedures to
improve productivity and effectiveness.
Adrian Horsford comes to Belmont with 15 years experience in the restaurant business
running restaurants in both Grenada and New York. His experience includes restaurants
such as Aquarium, Rendezvous Beach Resort, Neon Parrot, Tropical Paradise and Harmon
Jerk Centre and Bakery. Throughout his career, he has held middle and upper management
26
positions and has attended many courses in the hospitality field. Adrian has already
succeeded in making our restaurant one of the best on the island.
Paula Lewis is the sales and marketing manager with responsibilities for product
development, special projects, and IT. She is currently pursuing a Bachelor’s degree in
hotel and tourism management at the University of Massachusetts, in the United States,
sponsored by the company.
Phebe Paul has been with Shadel Nyack Compton since 1996, first as her legal secretary
specializing in real estate transactions. Since 2002 Phebe has worked with the company
developing the property management and real estate side of the business. Her knowledge
of the island and property sales along with skills in negotiation and communication mean
she is a strong manager for the new real estate agency.
Rawlins Smith comes to Belmont with a wealth of experience having worked most of his
life in agriculture. Prior to joining Belmont Estate as farm manager, he worked with the
Grenada Cocoa Association for 26 years, moving through the ranks to become manager of
the Mt Horne Cocoa Station. His expertise and skills in farm management, cocoa
production and processing will make a real difference to the estate improving production
and profitability.
Jillian Thomas currently works with the company and is the manager in charge of
accounts. She handles all the internal accounts keeping, banking reconciliation and record
keeping and payroll, and prepares all accounts for review and final preparation by the
27
company’s accountant. She has been with the company for 8 years, and she is currently
working on her ACCA accreditation, sponsored by the company.
Christine Curry is a consultant to the company. Christine holds a Bachelors Degree in
social science from Texas University and is currently director of project development at the
The Grenada Project. She brings with her over 20 years experience in the veterinary field
and economically sustainable agriculture, crop and animal production, recycling of waste
products for animal feed. She is currently setting up a goat diary farm producing milk,
cheese, yoghurt and puddings to be sold at Belmont promoting the buy local campaign.
Previously Christine worked at St George’s University School of Veterinary medicine as
director of development overseeing vet health activities regarding domestic production,
marine and wildlife animals. Her experience and dedication are helping Belmont achieve
its goals for the petting zoo and animal welfare.
Dr. Buxton Nyack is a consultant to the company. Dr Nyack has been a doctor of
veterinary medicine for 35 years, having graduated from the University of Tuskegee in
Alabama, USA and went on to teach there for over 20 years at the veterinary school. He
has served with the Government of Grenada as chief of veterinary surgeon for 10 years.
Presently he is a professor at St George’s University Veterinary School and maintains a
small private practice serving mostly rural, farming communities. Currently Dr Nyack
supervises the veterinary care of all our animals on the estate.
Over the last few months we have made a concerted effort to bring more competent
personnel to include as part of the management. It has become important to include more
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agricultural and tourism expertise on the board of directors to help guide the agricultural
and tourism business of the company. The organizational chart of the company is
presented in Figure 2.3.Figure 2.4 represents the organogram, showing the various
enterprises that make up Agriculture and Tourism departments.
Figure 2.3: Belmont Estate Organizational Chart
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Figure 2.4 Belmont Estate Organogram
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2.5 Value Proposition
Over the last decade there has been a shift in the tastes and demands of tourists that visit the
Caribbean, demanding more than sand, sea and sun, and calling for a more meaningful type
of visitor experiences. It is against this backdrop, the concept of agri-tourism emerged,
blending the agricultural culture, experience and process to the islands tourism offering.
Belmont Estate is indeed a perfect example of such a product. A leading agri-tourism
business it has a substantial competitive edge and customer appeal, offering exceptional
quality products, experiences and services to all guests. Developmental goals will ensure
that the business is highly successful and profitable with the potential to expand its product
offerings. The challenge is to maintain the competitive position that it now enjoys.
Belmont Estate will be able to deliver on these value propositions because it is has a board
of directors and management team that are committed to delivering quality as delineated in
it core values.
Belmont Estate is able to differentiate itself on the following points:
1. It has a product that is inimitable. It would be very difficult to imitate this product
because of some of the historical features and buildings that exist on the property,
because of intrinsic historical value, and also because of the complex and diverse
range of product offerings that Belmont Estate presents to its guests.
2. A strong commitment to superior quality ,
3. It is the only plantation experience of it’s kind in Grenada and one of a few in the
Caribbean that offers such a range of facilities for tourists to visit,
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4. The restaurant has a capacity of 250 seats, one of the largest in the country,
allowing for the catering of large events,
5. Offers volunteer tourism possibilities for persons who wish to make a contribution
to a particular enterprise or to the community,
6. Offers educational and internship programs in agriculture, tourism, and Grenada’s
history and heritage,
7. Strong commitment to the business, maintaining its competitive advantage by new
product development, employing innovative business methods, continued training
for staff, constant business evaluation, and addressing customer demands, and
8. Strong commitment to the environment and community.
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CHAPTER III: MARKET AND FUNCTIONAL ANALYSIS
3.1 Introduction
We present an analysis of the tourism and agricultural markets in Grenada in this chapter.
Additionally, we look internally at the Belmont Estate organization and conduct a thorough
functional analysis of its internal systems and structures.
3.2 Market Analysis
The Agri-tourism market in Grenada has been developing over the last 10 years under the
umbrella of eco-tourism, the designation under which Grenada markets its tourism product.
Belmont Estate entered the tourism market in 2002, and within a year established itself as
the number one agri-tourism destination in Grenada. To date, there is no defined national
strategy for the focus or development of Grenada’s product. The destination is marketed as
an eco-tourism destination. However, in recent years there has been an effort to include
heritage tourism, agri-tourism, community tourism and sports tourism within the tourism
portfolio that Grenada offers.
Belmont Estate is one of about five agri-tourism destinations in Grenada currently open to
visitors – the others include three rum distilleries - River Antoine Rum distillery,
Westerhall Rum distillery and Clarkes Court Rum Distillery - and the Grenada Co-
operative Nutmeg Association (GCNA) processing plants. River Antoine Rum Distillery is
located about two miles from Belmont Estate. It is a sugarcane plantation that cultivates
sugar cane for making molasses and rum. The estate dates back to 1763, and it still uses the
original water wheel for crushing the sugarcane for molasses production. This feature in
itself is indeed a valuable and interesting process for tourists to witness, as the waterwheel
is believed to be the only functioning water wheel in the Caribbean and probably one of a
33
few remaining in the world. River Antoine is a national treasure and certainly an inimitable
product that has significant customer appeal. In 2007, River Antoine included a restaurant
and bar in its product offerings, competing directly with Belmont Estate for dining
business. The other two rum distilleries are located about 30 miles south of Belmont Estate.
They use more modern methods for rum production, importing molasses for making rum,
and producing the finished product here. Like River Antoine, they also offer tours of their
processing facilities to visitors. The GCNA is the statutory body, established in 1946,
responsible for the production of nutmegs in Grenada as well as managing the sale,
regulating, exporting and marketing of the Grenada nutmegs, its products and by-products.
Though most of the nutmegs purchased by the GCNA are exported there is some quantity
that is utilized for making non-food value added products, like nutmeg oil, soaps, etc. The
GCNA facilities are open to visitors to witness the processing of the nutmegs and mace.
Currently, there are only a small number of agri-tourism enterprises in Grenada.
Overwhelmingly, the emphasis is mostly on eco-tourist products – river rafting, lakes and
waterfalls, mountain climbing, hot springs, garden visits, and other light adventure
activities based around a natural or historic site. The challenge for Belmont Estate is to
include similar product offerings and activities at the estate to attract the eco-adventure
tourists who may not be particularly interested in agriculture.
From its value proposition, it is observed that Belmont Estate has two principal markets:
agri-tourism market, and the organic and specialty foods markets. The agri-tourism market
was chosen carefully to meet the demand for alternative tourism products for our visitors
and also to supplement farming income. The organic and specialty foods sector was entered
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into because of the demand for organic cocoa for the making of organic chocolate by
Belmont Estate’s strategic partner, the Grenada Chocolate Company, and the consumer
demand for specialty foods. As a result, the estate formalized and tightened it practice of
organic farming and has been certified since 2001. It is presently certified by the German
certifier Ceres. To be certified organic, products must be grown and manufactured in a
manner that adheres to standards set by the country they are sold in. Our certification
includes Britain: Organic Farmers and Growers Organic Standards; European Union: EU –
Eco regulation; USA: National Organic Program (NOP).
In terms of specialty foods, there is no other agri-tourism enterprise in Grenada that is
currently developing specialty foods products. While there are local manufacturers that
make jams, jellies, confectionaries etc., these are mainly cottage industries, and are
generally not at the same source of the raw product. The intrinsic value of the agricultural
value added product for the tourist is being able to see the raw product being transformed
into a tasty tangible finished product, at or close to the source – or point of origin. This is
what Belmont Estate plans to offer the visitor. We view it as a niche market with
tremendous potential that needs to be developed and explored.
3.2 Organic and Specialty Foods Markets
The organic movement at Belmont Estate commenced when the Grenada Chocolate
Company, with its factory located about one mile from the estate approached the writer for
Belmont Estate to supply the business with organic cocoa. While we had been practicing
organic farming, we were not organically certified. We then began putting procedures in
place for certification, which occurred in 2003. Our certification originally was specifically
35
for the cocoa. However, since our farm is intercropped with fruit and vegetables, it meant
that they were being organically produced too. In light of this, we also made application
for certification for our fruit orchards, so at present our fruits are also organically certified.
The certification of vegetables is much more rigorous, as strict crop rotation regimes must
be adhered to. We are putting structures in place to prepare for the certification of our
vegetables.
The world organic market has been growing by 20% a year since the early 1990s, with
future growth estimates ranging from 10-50% annually depending on the country
(www.wikipedia.org/wiki/organic_food). In the United States, organic food sales have
grown by 17 to 20 percent a year for the past few years while sales of conventional food
have grown at only about 2 to 3 percent a year. Unfortunately, the organic food market in
Grenada is not well-established, but we believe that Belmont Estate is well positioned to
orchestrate the development of the organic market in the island. Like in the rest of the
world, our people have recognized the need to eat more wholesome, nutritious, tasty,
healthy foods, unexposed to unhealthy environments and noxious chemicals. While there is
the recognition of the health, safety, and environmental concerns, the demand has not been
strong enough to drive the supply side to produce organically. While many farmers practice
organic farming procedures, they are not certified as the certification process is
prohibitively expensive for most farmers. Consequently, produce that are organically
grown, at a cost about 10 to 30 percent more than conventionally grown crops, compete in
the marketplace with conventional products with no price differentiation. It is my position
that Belmont Estate is well positioned to be a pace-setter in establishing the market for
36
organic foods. First, we are certified and can sell our produce as certified organic. Second,
we already have an established brand name as an agri-tourism destination that can be
further identified as an organic foods producer. Third, we have our own retail and
wholesale shop where we can market our organic products and set prices to differentiate
from the conventionally grown crops.
As already stated, Belmont Estate is well positioned to enter the market in producing
specialty foods. Of particular interest are condiments, jams, jellies, teas, and similar
products that can be produced from the fruit of the estate. At present there is no structured
program for production, and products are made on an ad-hoc inconsistent manner. We
recognize the strong demand for these products, as visitors to Belmont Estate consistently
ask for products to purchase, and when we produce and market small quantities, they
disappear from the shelves in just a few days. We have retained the services of a chemist
to assist us in the formulations for developing a series of value-added food products that we
have identified.
We have recently commenced a goat dairy project, the first of its kind in Grenada, through
the kind assistance and co-operation of The Grenada Project a local and U.S. registered
non-profit. The Grenada Project has funded the construction, set up and stocking of the
goat farm and dairy. The proposed project will plan and implement a training program for
small agricultural farming through the establishment of a model goat farm and dairy in the
agricultural sector that will serve as an educational base and extension service outreach for
the island of Grenada. The plan is to enable farmers to produce top quality milk that can be
bought by the diary and utilized in the production of feta cheese, yogurt, and other specialty
37
products. These products will be available for sale at our produce shop; will be also utilized
in food preparation at the café and restaurant; and will be sold in local supermarkets on the
island. After the successful completion and running of the goat dairy project, The Grenada
Project intends to utilize this as an example for developing another goat dairy facility for
farmers in another part of the island. This facility will also serve as a tourism attraction that
sustains and enhances the unique environment, culture, aesthetics and heritage of Grenada.
It is available for guests to Belmont Estate to visit.
With the assistance of the food chemist we intend to develop a full line of value added food
products that will be available for sale at Belmont Estate and at other retail establishments
on the island. Non-food items, like cosmetics will also be explored.
3.3 Analysis of Porter’s Five Competitive Forces
Adapting Porter’s five forces of inter-firm competition to our industry, it gives the picture
of one in which competition is low. The competitive forces analysis is made by the
identification of five competitive forces: entry of competitors, threats of substitutes,
bargaining power of buyers, bargaining power of suppliers and rivalry among existing
players.
In analyzing the agritourism business, it is not easy for new entrants to enter the
marketplace and start competing, at least not at the level of sophistication, and scale that we
presently enjoy at Belmont Estate. A legitimate agricultural business is required, and to
present it in such a way that it is interesting, and educationally edifying for visitors. While
this is fairly easy to achieve, the challenge is to do so at the magnitude, scale, and
professionalism, that a visitor would be interested in visiting the project. There are several
38
barriers that exist for new entrants developing such enterprises. They include: high start up
costs; lack of funding from traditional financial institutions for farming projects;
requirement of large acreages of land which is not readily available; shortage of labor for
agricultural farm projects; the time required for the establishment a farming business, and
the difficulty in creating a unique and varied product as we have. Further, in our
jurisdiction, there are no farm subsidies from the government, and farming has been
becoming an unattractive business for farmers interested in generating profits from farming
alone. All of these factors are barriers to easy entry in the agri-tourism marketplace.
Usually farmers already occupied in farming, choose to include tourism offerings as a
means of supplementing income, rather than develop a new start up business. However,
though our agricultural system was rooted in the plantation system, most large plantations
have been subdivided into small farms. These small farms are unable to accommodate the
rigors of tourist traffic, and further lack the resources to further develop their farms for
agri-tourism.
Threat of substitutes is not a significant threat. Substitutes in our business could be another
type of tourism enterprise, for example sports tourism, adventure tourism, or leisure or
pleasure tourism. They usually threaten the business through price competition, making
their products more affordable that of the status quo. To be a real threat to our business,
these substitutes would have to offer a better quality of service at a better price, and would
have to convince our customers to substitute. We enjoy a very loyal customer base who
values the products and services they receive. Further, our product is so unique that it is not
39
just agricultural, but it is recreational, ecological and nature based. As such it provides each
guest a variety of activities from which to choose.
Belmont Estate is unique in that it generates most of the supplies and raw materials it needs
for the execution of the business internally so there are not a lot of competitive issues with
regards to the bargaining power of suppliers. On the other hand, and for different reasons,
the bargaining power of buyers also does not present significant competitive issues.
Because of the exclusivity and inimitability of Belmont Estate’s product, it places us in a
strong bargaining position, and weakens the bargaining position of the buyer. Since price is
no longer a significant competitive factor, and because of the special nature of the product
that we offer is, it leaves the buyer with little alternative on Grenada or any other Caribbean
island. In this industry, there are many buyers and few sellers of a product as ours. We are
able to differentiate ourselves in terms of our service, quality and variety of product
offerings. The issue of switching costs is almost moot, as the buyers do not have many
options for switching to other suppliers. In examining all these factors, the bargaining
power of buyers for our business is weak.
The intensity of the rivalry for our business is correspondingly weak. Belmont Estate is the
industry leader in agri-toursim enterprises in Grenada. It has positioned itself so that the
business in not easily replicated by another, creating a near-monopolistic competitive
environment As the clear industry leader with a definite competitive advantage, it is
incumbent on Belmont Estate to put strategies in place to sustain the competitive edge.
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3.4 Functional Analysis
This section is the core of this strategic business plan where I will look at the marketplace
gap that creates the environment for Belmont Estate to capitalize on the opportunity we
define as our objectives and goals and specify the strategies to achieve the defined goals
and objectives. I will also present an execution plan to address the role of management,
staff, partners and customers.
The functional analyses are set within the framework of the company’s value chain (Figure
3.1). I begin by looking at the company’s resources, people, technology, infrastructure,
relationships as creating the distinctive competitiveness. I will further analyze the
operations of the business by examining the internal and external foci – food production,
guest services, sales and marketing and customer service and support, to help us identify
areas of strengths and weaknesses. It is my position, that after this analysis, and the
identification of our strengths and weaknesses, I will be able to clearly define our strategy
of twining our distinctive competitiveness and with the superior operations that we will
develop to ensure outstanding performance, defined as fulfilling our vision and mission.
The specific program includes our capacity to increase profits, and market share in the food
production (to include organic and specialty goods) and the guest services relations for our
agri-tourism business.
41
Figure 3.1:Value Chain Model
3.5 The Market Gap and Opportunities
The principal market gap driving Belmont Estate is the strong demand of interesting
destinations for tourists and locals to visit. Foreign guests, though still primarily motivated
by the ideal climatic conditions, pleasant scenery and good food, now require diversity,
cultural and social enrichment as additional factors in destination choice. Local people also
require safe, wholesome, fun, diverse, educational venues to visit with family and friends.
Belmont Estate is the only tourism destination in Grenada that offers the visitor diversity in
experiences and products to consume and enjoy. It is also peculiar in that it is probably the
only venue that offers a capacity of about 250 seats for functions, thus the perfect choice
for locals to have family parties, reunions, graduation functions and weddings. It is
outstanding and unique, and fills the market gap as the best visitor destination for locals
and tourists alike. It has been recognized as the clear industry leader and we intend to
maintain this position for the long term.
42
The other market gap that we intend to fill is the gap for organic and specialty foods. At
present, there is no clear industry leader in this segment, allowing us the opportunity to be
poised to seize this position in this emerging market. Customers are becoming more
discerning about consuming healthy foods that are ethically produced. Belmont Estate
offers clear traceability in food preparation and handling, organic certification, fair labor
standards, and environmental and social responsibility. We are well poised to position
ourselves at the nexus of the entry point into this market place, sealing and maintaining our
position as market leader for the long term.
3.6 Principal Objectives and Strategy by Functional Area
Belmont Estate’s vision is to be premier destination of choice. Four functional areas
together provide the framework for preparing the company to achieve its strategic vision. I
have defined the principal corporate objectives around these functional areas to facilitate
allocation of responsibilities, accountabilities, and resources. This approach also assists
management in identifying and isolating critical areas of deficiency and how they are affect
the overall performance of the company. The four functional areas are food production,
guest services, sales and advertising and customer service and support.
I have indeed “inherited” a company that lacked management and leadership over the last
four decades since the death of my grandfather in 1969. There was no formulation of a
strategic direction of the company, no set goals or objectives, and no determination of the
mission, vision or core values. As with any business, I believe the underlying focus of the
business was merely the realization of an immediate profit. The responsibility is now mine
to redirect and refocus the company. This would require monumental changes in the way
43
that we are accustomed to operating, and re-directing an entire management and staff to the
new focus.
Already, we have put in adequate management and an organization structure to achieve
this. (See figure 2.3). We have made the capital investments to improve and develop the
business, by constructing new buildings, facilities and infrastructure and carefully and
generously outfitting the same for our business purposes. What is needed is the total buy-in
from management and staff, and their unwavering commitment to embrace the new
corporate strategies, and the new way of thinking, to guarantee our success.
In this section we will also present the strategies to be implemented to achieve our
objectives. It must be noted that these strategies are formulated to work together, and not
independently, creating the right synergy and dynamics for the unit to work in harmony to
achieve its strategic vision and mission.
3.6.1 Food Production
Food production at Belmont Estate as addressed in this thesis encompasses three profiles:
food production on the farm; value added food production of specialty items like the
organic chocolate, goat dairy products and confectionaries, jams, jellies and teas; and
restaurant food production. In each of these areas, we need to address the issue of
improving our quality, and quantity of product and being able to do so consistently. These
are our objectives and strategies to achieve them for food production
The objectives of the food production enterprise are as follows:
44
• Increase yield per acre of crops based on the optimum yield for specific crops and
resulting in a 100% increase in farm income over the next 10 years,
• Increase quality of crops,
• Diversify fields with other varieties of fruit and crops,
• Completely cultivate the entire estate with tree crops and food crops over the next
three years, except for areas already kept as forest reserves,
• Institution of a food security program that aims at Belmont Estate being 95%
sufficient in providing the restaurant with food, rice, wheat products and others that
we are unable to produce locally.
The specific strategies we intend to pursue to achieve the foregoing objectives are as
follows:
• Employ a more scientific and technological approach to farm development.
Conduct research on better varieties of cocoa and nutmegs to re-plant fields,
especially varieties with greater yields and shorter period from planting to
harvesting, and other fruit and vegetable suitable for out farm.
• Improve organic farming practices, especially fertilizer application, disease
prevention, field management and maintenance and crop rotation, where applicable.
• Improve post-harvesting handling of crops for improved quality
45
• Training, research and development are needed in all of the above areas to
effectuate our strategy.
As of the writing of this thesis there has been no definite plan in place for the production of
value added products on the estate. While certain products have been made intermittently
as seasonal produce is available, there has been no planned production of same. It has
become timely for this to be put in place. This can be done with small capital investment if
the focus is to utilize fruit and vegetable material that are produced in surplus of the market
demand, and using simple methods and procedures for processing that require basic
equipment and little inputs. Initially the target market can be the visitors to the estate, with
plans to expand to other tourist retail outlets on the island, and local supermarkets as well.
• To produce a line of about 50 products over the next five years branded under the
Belmont Estate brand name for sale at the produce shop and on the domestic tourist
market
Food Production for the Value Added Products – Strategies
• Develop unique recipes and formulas for the production of products utilizing fruits
and vegetables already grown on the estate
• Commence with 15 products in year one, with a phased progression to 50 products
by year five.
• Develop a small line of organic products over the next two years.
46
Restaurants are very dynamic environments where trends and tastes are constantly
changing as consumers demand more diversity in flavor, presentation, and ingredients. To
maintain market share, we must be able to satisfy customer demands and to offer a superior
product. We must continue to develop our product so customers recognize our superior
offerings.
The objectives for the food production going directly into the restaurant are as follows:
• Develop a line of foods that will be marketed as Belmont Estate specialty recipes,
• Develop a line of sauces to be used and marketed at the restaurant and sold in the
produce shop,
• Constantly develop and improve recipes of foods that are prepared at the restaurant,
• Develop a full range of desserts and baked foods for restaurant, café and produce
shop, to be consumed on site, and to be taken away,
• Maintain the highest standards in food preparation, quality and taste and to be
compliant with HACCP hygiene standards.
The strategies that will be employed to achieve the objectives are:
• Continuous program of training of staff in food, pastry and dessert preparation.
• Form a small committee of food experts from outside the company to assist with
the development of new recipes and performance assessment
47
• Engage the services of food tasting personnel that will periodically assess the food
taste, preparation, presentation, etc.
3.6.2 Guest Services
The objectives of guest services are as follows:
• To consistently deliver to our customers exceptional service, always satisfying their
expectations in the total visitor experience,
• To offer our guests the best destination on the island for food, agritourism activities,
agricultural products with the greatest variety of visitor activities,
• To offer to locals the best destination for outstanding food, entertainment and
activities for the entire family, and
• To consistently increase our total daily visitors to 150 visitors per day by 2015.
The following strategies will be pursued to achieve the objectives of guest services:
• To develop within our staff the organizational culture of exceptional customer
service by educating and sensitizing them to our strategic direction and core values
• Constant training, education and development opportunities for management and
staff.
• Develop and implement marketing strategy to address our objectives.
48
3.6.3 Sales and Marketing
Sales and Marketing will play a pivotal role in the success of this enterprise. While we may
have developed the best agri-tourism on Grenada and in the Caribbean, it is of no value if it
is not appropriately marketed to the world, so as to generate the recognition and the
customers necessary to arrive at a position of profitability and to gain competitive
advantage. It is thus imperative that a well-thought out marketing plan be implemented to
attract the required customers and to help us realize our objectives. Specifically some of the
objectives that we intend to achieve are:
• To increase our foreign visitors to Belmont to 30% of the total visitor arrivals to
Grenada by 2010 and to maintain at that rate,
• To increase our local guests to Belmont to 25% of the population per annum by
2010, and to maintain at that rate,
• To increase our marketing of farm products, and all enterprises so that the public is
aware of our comprehensive product offerings,
• To build our relationship with the media, tour operators, taxi drivers, hotel
management and staff, local businesses, government, schools and churches, so that
Belmont Estate is indelibly engraved in their minds as the first option for agri-
tourism services, specialty foods, and any of the other services that we offer,
• To continue to market Belmont Estate as unique, differentiating us from the
competition,
49
• To increase our visibility on the internet.
Sales and Marketing – Strategies
• To build a website that truly reflects the new direction of the company, our strategic
direction, comprehensively lists all our products and services, and our charitable
and social and environmental contributions as well.
• Foster a closer relationship with our strategic partners and customers by keeping
them updated on our products, special events, services, and inviting feedback from
them regarding our products and services from time to time.
• Increase our present advertising and marketing with more print, billboard and
television presence. In particular, engage the media to cover our special events and
to do features on the estate from time to time. We also need to capitalize on our
special projects as news events allowing us free publicity for the business at the
same time.
• We must properly brand our products and services distinctly as Belmont Estate.
This brand must be synonymous with outstanding quality, service, products and
experiences.
3.6.4 Customer Service and Support
Presently our customer service and support is quite weak. We have not put strategies and
procedures in place to ensure that we give the customers all that they desire; neither do we
have a consistent medium through which we can illicit feedback from them regarding their
50
suggestions, desires and complaints. Indeed, we believe that we provide an outstanding
visitor experience for a guest, but aside from that, how do we communicate to our guests
their value and importance to us? We recognize the shortcoming in our value chain and
know how important it is to build and maintain strong relationships with our customers.
Accordingly we have formulated the following objectives to provide our valuable
customers with the appropriate level of service and support:
• Know who our customers are by developing a database of local and foreign
customers.
• Develop personal relationships with our guests by doing follow up calls, sending
cards on special occasions, and recognizing guests when they return.
• Recognize the value of customers, repeat customers, customer referral, and translate
this into excellent delivery to customers at all time, and recognition of them when
they visit. Make every visit to Belmont Estate a memorable one for each guest.
• Allow the guests an adequate forum to communicate with management and staff
regards concerns, compliments or criticisms.
The strategies to be used to achieve the objectives of customer service and support are:
• Implement procedures to have tour guides and hostesses document all guests to
include name, address, and necessary demographics.
51
• Institute a membership club whereby frequent visitors can have special privileges at
Belmont.
• Develop a 100 % customer satisfaction policy by surveying guests twice a year to
get feedback on quality, service, products, and visitor experience.
• Make available to the guests adequate mediums to communicate to us at Belmont
via e-mail contact, website contact, telephone and traditional mail.
52
CHAPTER IV: FINANCIAL PROJECTIONS
4.1 Introduction
In this chapter, the financial projections emanating from the foregoing initiatives are
presented. A key aspect of this plan is the financial evaluation of investment proposals, to
ensure that the finances outlaid will guarantee future financial benefits.
The projections that will be presented are pro forma profit and loss for the business for 10
years, cash flow and projected balance sheet for the same period of time. However, prior to
presenting the financial projections, we present the assumptions that have been explicitly
made to produce these financials. Obviously, the changes in these assumptions provide a
foundation for conducting scenario analysis while changes in the base values allow us to
conduct sensitivity analyses of the outcomes. To determine the economic worth of the
investment we will calculate the internal rate of return.
4.2 Assumptions
The company has to date borrowed the sum of $3,300,000 Eastern Caribbean Dollars
(approximately $1.3 M USD) for the development and establishment of the agri-tourism
business. I have allocated a portion of the debt to each business enterprise based on the
level of capital that was injected therein. The percentage breakdown is as follows: 65% to
tourism and 35% to the farm.
53
For the purpose of this thesis, we have formulated two separate pro forma income
statements, one for the agriculture and the other for tourism. The individual enterprises that
make up agriculture are the farm, dairy farm, and cocoa agency. The individual enterprises
that comprise tourism are the restaurant, produce shop, conference centre, tours, café and
museum. I have included in these discussions the underlying assumptions forecasted for
the individual enterprises with agriculture and tourism, however, the income and expenses
of the individual enterprises have been appropriately consolidated under the designations of
agriculture or tourism.
For the café revenue has been projected to grow at 15 percent per annum over the period.
Wages have been computed at 10 percent of income, Food and drink costs as 30 percent of
income. For the Cocoa Agency revenue is projected at 12 percent every year for first 5
years then 10 percent each year thereafter. Cocoa wages based on 5 percent of cocoa sales.
Salaries are fixed but are raised by 10 percent every three years. Various expenses are
based on actual for last year and are increased by 5 percent every year thereafter.
The conference Center’s revenue is projected to grow by 20 percent per year in the first 5
years, and then 10 percent annually thereafter. There are not salaries and wages attributed
to this department as there is no staff assigned here. Staffing would be handled by
administrative staff and have already been accounted for in the corporate expenses.
Variable expenses are estimated at 5 percent of sales.
54
The dairy farm is projected to sell 20 products per day (300 days in a year) at $5 each. 15
percent for first 5 years then 10 percent growth per annum Variable costs rising by 5
percent per year
The farm’s labor expenses are based on actuals and have been set to decrease over the next
three years at 10 percent per year because the labor is very high, and needs to be decreased.
For the museum, there is no capital expenditure expense allocated for repayment by the
museum as the museum was completely built and furnished by grant funds. I forecasted in
increase in income of 15 percent annually for five years and thereafter an increase of 10
percent. There is a salary increase every three years of 10 percent.
For the restaurant I have projected the following: Sales annual increase by 25 percent up to
2014; top capacity 150 covers per day at $50 should be reached by 2015 = $2,225,000 per
annum; Wages increased by 12 percent of income each year.
For tours, I projected that there will be a 15 percent increase in sales in first 5 years then 10
percent annual increase thereafter, leveling off by Year 10.
The financial forecast for Belmont Estate looks positive over the long term. The farm is by
and large the greatest liability in the matrix, consistently operating at a loss over the next
ten years, though decreasingly so. However, we cannot analyze the farm’s performance
separate and apart from the other enterprises, as it is the core and foundation on which all
the other businesses are built. Instead, we must observe how the farm bolsters the positive
55
financial performance of the other enterprises, resulting in a turn around from loss to profit
by year three.
4.3 Financial Projections
The financial projections have been performed for the next ten years, 2008-20017. The
projections included are the following: Pro Forma Income Statement Projections for
Agriculture presented in Table 4.1; Pro Forma Income Statement for Tourism presented in
Table 4.2; Pro Forma Income Statement Consolidated for Agriculture & Tourism presented
in Table 4.3; Pro Forma Balance Sheet Projections presented in Table 4.4; and Pro Forma
Balance Cash Flow Projections presented in Table 4.5.
The pro forma income statement projection for agriculture shows the inherent challenge in
this department of the difficult position of the business to take agriculture to a positive
annual position of profitability. While the gross sales of the farm increases from $660,000
in the first year to $1,656,279 by year 10, the high wage and salary bill among other high
costs invariably results in the farm’s net income remaining negative for nine of the ten
years. In year one the net income is -$398,312 and fluctuates throughout the period though
showing an increasing trend, and eventually making it to a positive net income of $45,474
by year ten.
The tourism’s department’s net income position shows more variability than agriculture.
The gross sales grows significantly over the 10 year period from $898,000 in year one to
$3,541,742 in year 10, the net income position of the tourism department does not reflect
56
such consistent increase mostly because of the inclusion of high depreciation costs for
replacement of assets. The net income position in year one is $288,501, moving to $92,540
in year ten.
The pro forma consolidated income statement reflects the consolidation of the agriculture
and tourism components of the business, showing the net position of Belmont Estate for the
period.
The pro forma balance sheet projections net the total assets and liabilities for the period.
The net annual positions remain between 19,000,000 and $20,800,000 for the period.
The pro forma cash flow projections look at the uses of the cash by the company over the
ten year period. The assumptions underlying the cash flow assumptions are the same used
to construct the profit and loss statements. The cash flow position of the company moves
from $226,237 in year one to $2,031,317 by year ten.
57
Table 4.1 Pro Forma Income Statement Projections – Agriculture 2008 – 2017
Revenue 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Gross sales 660,000$ 735,000$ 818,580$ 911,728$ 1,015,545$ 1,131,261$ 1,244,387$ 1,368,826$ 1,505,708$ 1,656,279$
Cost of Sales
Total goods available 350,000$ 392,000$ 439,040$ 491,725$ 550,732$ 616,820$ 678,502$ 746,352$ 820,987$ 903,086$
Total cost of goods sold 350,000$ 392,000$ 439,040$ 491,725$ 550,732$ 616,820$ 678,502$ 746,352$ 820,987$ 903,086$
Gross profit (loss) 310,000$ 343,000$ 379,540$ 420,003$ 464,813$ 514,441$ 565,885$ 622,474$ 684,721$ 753,193$
Operating Expenses
Salaries and wages $539,100 $503,800 $472,624 $458,891 $465,664 $469,913 $488,904 $513,266 $518,064 $523,342
Employee benefits $21,564 $20,152 $18,905 $18,356 $18,627 $18,797 $19,556 $20,531 $20,723 $20,934
Advertising $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
Total Operating expenses 565,664.00$ 528,952.00$ 496,528.96$ 482,246.52$ 489,290.75$ 493,709.20$ 513,460.11$ 538,796.38$ 543,786.28$ 549,275.16$
General Administration
Salaries and wages 41,440$ 41,440$ 41,440$ 47,656$ 47,656$ 47,656$ 54,804$ 54,804$ 54,804$ 54,804$
Employee benefits 1,658$ 1,658$ 1,658$ 1,906$ 1,906$ 1,906$ 2,192$ 2,192$ 2,192$ 2,192$
Insurance 4,250$ 4,250$ 4,250$ 4,888$ 4,888$ 4,888$ 5,621$ 5,621$ 5,621$ 5,621$
Property taxes 4,250$ 4,250$ 4,250$ 4,888$ 4,888$ 4,888$ 5,621$ 5,621$ 5,621$ 5,621$
Utilities 8,500$ 8,500$ 8,500$ 9,775$ 9,775$ 9,775$ 11,241$ 11,241$ 11,241$ 11,241$
Depreciation and amortization -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Office supplies & postage 1,700$ 1,700$ 1,700$ 1,955$ 1,955$ 1,955$ 2,248$ 2,248$ 2,248$ 2,248$
Interest 80,850$ 78,878$ 76,768$ 74,510$ 72,094$ 69,509$ 66,743$ 63,783$ 60,616$ 57,227$
Total Expenses 708,312$ 669,627$ 635,094$ 627,823$ 632,452$ 634,285$ 661,930$ 684,307$ 686,130$ 688,230$
Net income before taxes (398,312)$ (326,627)$ (255,554)$ (207,821)$ (167,639)$ (119,844)$ (96,045)$ (61,833)$ (1,408)$ 64,963$
Taxes on income -$ -$ -$ -$ -$ -$ -$ -$ -$ 19,489$
Net income after taxes (398,312)$ (326,627)$ (255,554)$ (207,821)$ (167,639)$ (119,844)$ (96,045)$ (61,833)$ (1,408)$ 45,474$
Net Income (Loss) (398,312)$ (326,627)$ (255,554)$ (207,821)$ (167,639)$ (119,844)$ (96,045)$ (61,833)$ (1,408)$ 45,474$
Belmont Estate (Agriculture Division)Pro Forma Income Statement Projections
December 31 2008 - 2017
58
Table 4.2 Pro Forma Income Statement – Tourism – 2008 – 2017
Revenue 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Gross sales 898,000$ 1,083,600$ 1,309,720$ 1,585,599$ 1,922,650$ 2,318,134$ 2,801,960$ 3,260,673$ 3,392,331$ 3,541,742$
Cost of Sales
Total goods available 219,000$ 266,850$ 325,628$ 397,909$ 486,892$ 596,547$ 731,806$ 858,541$ 886,073$ 917,733$
Total cost of goods sold 219,000$ 266,850$ 325,628$ 397,909$ 486,892$ 596,547$ 731,806$ 858,541$ 886,073$ 917,733$
Gross profit (loss) 679,000$ 816,750$ 984,093$ 1,187,690$ 1,435,758$ 1,721,587$ 2,070,154$ 2,402,132$ 2,506,258$ 2,624,009$
Operating Expenses
Salaries and wages 115,800$ 118,050$ 120,638$ 138,133$ 141,555$ 145,490$ 166,654$ 171,858$ 177,843$ 184,726$
Employee benefits 4,632$ 4,722$ 4,826$ 5,525$ 5,662$ 5,820$ 6,666$ 6,874$ 7,114$ 7,389$
Advertising 15,000$ 15,000$ 15,000$ 25,000$ 25,000$ 25,000$ 25,000$ 25,000$ 25,000$ 25,000$
Total Operating expenses 135,432$ 137,772$ 140,463$ 168,658$ 172,217$ 176,310$ 198,320$ 203,733$ 209,957$ 217,115$
General Administration
Salaries and wages 71,680$ 71,680$ 71,680$ 82,432$ 82,432$ 82,432$ 94,797$ 94,797$ 94,797$ 94,797$
Employee benefits 2,867$ 2,867$ 2,867$ 3,297$ 3,297$ 3,297$ 3,792$ 3,792$ 3,792$ 3,792$
Insurance 12,750$ 12,750$ 12,750$ 14,663$ 14,663$ 14,663$ 16,862$ 16,862$ 16,862$ 16,862$
Property taxes 8,500$ 8,500$ 8,500$ 9,775$ 9,775$ 9,775$ 11,241$ 11,241$ 11,241$ 11,241$
Utilities 38,250$ 38,250$ 38,250$ 43,988$ 43,988$ 43,988$ 50,586$ 50,586$ 50,586$ 50,586$
Depreciation and amortization 541,071$ 1,082,143$ 1,623,214$ 564,286$ 1,105,357$ 1,646,429$ 2,187,500$ 900,000$ 1,441,071$ 1,982,143$
Office supplies & postage 6,800$ 6,800$ 6,800$ 7,820$ 7,820$ 7,820$ 8,993$ 8,993$ 8,993$ 8,993$
Interest 150,150$ 146,487$ 142,568$ 138,375$ 133,888$ 129,087$ 123,950$ 118,454$ 112,572$ 106,279$
Total Expenses 967,501$ 1,507,249$ 2,047,093$ 1,033,294$ 1,573,437$ 2,113,800$ 2,696,041$ 1,408,457$ 1,949,872$ 2,491,808$
Net income before taxes (288,501)$ (690,499)$ (1,063,000)$ 154,396$ (137,679)$ (392,213)$ (625,886)$ 993,674$ 556,386$ 132,201$
Taxes on income -$ -$ -$ 46,319$ -$ -$ -$ 298,102$ 166,916$ 39,660$
Net income after taxes (288,501)$ (690,499)$ (1,063,000)$ 108,077$ (137,679)$ (392,213)$ (625,886)$ 695,572$ 389,470$ 92,540$
Net Income (Loss) (288,501)$ (690,499)$ (1,063,000)$ 108,077$ (137,679)$ (392,213)$ (625,886)$ 695,572$ 389,470$ 92,540$
Belmont Estate (Tourism Division)Pro Forma Income Statement Projections
December 31 2008 - 2017
59
Table 4.3 Pro Forma Income Statement – Consolidated Agriculture & Tourism – 2008 – 2017
Revenue 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017Gross sales 1,558,000$ 1,818,600$ 2,128,300$ 2,497,327$ 2,938,195$ 3,449,395$ 4,046,347$ 4,629,499$ 4,898,039$ 5,198,021$ Cost of SalesTotal goods available 569,000$ 658,850$ 764,668$ 889,634$ 1,037,624$ 1,213,367$ 1,410,307$ 1,604,893$ 1,707,059$ 1,820,819$
Total cost of goods sold 569,000$ 658,850$ 764,668$ 889,634$ 1,037,624$ 1,213,367$ 1,410,307$ 1,604,893$ 1,707,059$ 1,820,819$ Gross profit (loss) 989,000$ 1,159,750$ 1,363,633$ 1,607,693$ 1,900,571$ 2,236,028$ 2,636,040$ 3,024,606$ 3,190,979$ 3,377,202$
Operating ExpensesSalaries and wages 654,900$ 621,850$ 593,262$ 597,024$ 607,219$ 615,403$ 655,558$ 685,124$ 695,907$ 708,068$ Employee benefits 26,196$ 24,874$ 23,730$ 23,881$ 24,289$ 24,616$ 26,222$ 27,405$ 27,836$ 28,323$ Advertising 20,000$ 20,000$ 20,000$ 30,000$ 30,000$ 30,000$ 30,000$ 30,000$ 30,000$ 30,000$
Total Operating expenses 701,096$ 666,724$ 636,992$ 650,905$ 661,508$ 670,019$ 711,780$ 742,529$ 753,743$ 766,390$ General AdministrationSalaries and wages 113,120$ 113,120$ 113,120$ 130,088$ 130,088$ 130,088$ 149,601$ 149,601$ 149,601$ 149,601$ Employee benefits 4,525$ 4,525$ 4,525$ 5,204$ 5,204$ 5,204$ 5,984$ 5,984$ 5,984$ 5,984$ Insurance 17,000$ 17,000$ 17,000$ 19,550$ 19,550$ 19,550$ 22,483$ 22,483$ 22,483$ 22,483$ Property taxes 12,750$ 12,750$ 12,750$ 14,663$ 14,663$ 14,663$ 16,862$ 16,862$ 16,862$ 16,862$ Utilities 46,750$ 46,750$ 46,750$ 53,763$ 53,763$ 53,763$ 61,827$ 61,827$ 61,827$ 61,827$ Depreciation and amortization 541,071$ 1,082,143$ 1,623,214$ 564,286$ 1,105,357$ 1,646,429$ 2,187,500$ 900,000$ 1,441,071$ 1,982,143$ Office supplies & postage 8,500$ 8,500$ 8,500$ 9,775$ 9,775$ 9,775$ 11,241$ 11,241$ 11,241$ 11,241$ Interest 231,000$ 225,365$ 219,336$ 212,885$ 205,982$ 198,596$ 190,693$ 182,237$ 173,188$ 163,507$ Total Expenses 1,675,812$ 2,176,877$ 2,682,187$ 1,661,117$ 2,205,889$ 2,748,085$ 3,357,971$ 2,092,764$ 2,636,001$ 3,180,038$ Net income before taxes (686,812)$ (1,017,127)$ (1,318,555)$ (53,424)$ (305,318)$ (512,057)$ (721,931)$ 931,842$ 554,978$ 197,164$ Taxes on income -$ -$ -$ 46,319$ -$ -$ -$ 298,102$ 166,916$ 59,149$ Net income after taxes (686,812)$ (1,017,127)$ (1,318,555)$ (99,743)$ (305,318)$ (512,057)$ (721,931)$ 633,739$ 388,062$ 138,015$ Net Income (Loss) (686,812)$ (1,017,127)$ (1,318,555)$ (99,743)$ (305,318)$ (512,057)$ (721,931)$ 633,739$ 388,062$ 138,015$
Belmont EstatePro Forma Income Statement Projections - Consolidated Agriculture & Tourism
December 31 2008 - 2017
60
Table 4.4 Pro Forma Balance Sheet Projections – 2008 – 2017
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
C urrent As setsCash (226,237)$ (21,115)$ 212,499$ 412,250$ 694,525$ 1,021,471$ 1,344,765$ 1,702,582$ 1,857,741$ 2,031,317$ Accounts Receivable 37,000$ 40,000$ 40,000$ 40,000$ 40,000$ 40,000$ 45,000$ 45,000$ 45,000$ 45,000$ Inventory 70,000$ 100,000$ 100,000$ 100,000$ 100,000$ 100,000$ 100,000$ 100,000$ 100,000$ 100,000$ Stocks & Investments 50,000$ 50,000$ 50,000$ 50,000$ 50,000$ 50,000$ 50,000$ 50,000$ 50,000$ 50,000$ T otal C urrent Assets (69,237)$ 168,885$ 402,499$ 602,250$ 884,525$ 1,211,471$ 1,539,765$ 1,897,582$ 2,052,741$ 2,226,317$
F ixed AssetsLand 12,500,000$ 12,500,000$ 12,500,000$ 12,500,000$ 12,500,000$ 12,500,000$ 12,500,000$ 12,500,000$ 12,500,000$ 12,500,000$ Buildings 7,500,000$ 7,500,000$ 7,500,000$ 7,500,000$ 7,500,000$ 7,500,000$ 7,500,000$ 7,500,000$ 7,500,000$ 7,500,000$ Depreciation 112,500$ 225,000$ 337,500$ 450,000$ 562,500$ 675,000$ 787,500$ 900,000$ 1,012,500$ 1,125,000$ Vehicles 200,000$ 200,000$ 200,000$ 200,000$ 200,000$ 200,000$ 200,000$ 200,000$ 200,000$ 200,000$ Depreciation 28,571$ 57,143$ 85,714$ 114,286$ 142,857$ 171,429$ 200,000$ -$ 28,571$ 57,143$ Equipment, furniture and fixtures 1,200,000$ 1,200,000$ 1,200,000$ 1,200,000$ 1,200,000$ 1,200,000$ 1,200,000$ 1,200,000$ 1,200,000$ 1,200,000$ Depreciation 400,000$ 800,000$ 1,200,000$ -$ 400,000$ 800,000$ 1,200,000$ -$ 400,000$ 800,000$ T otal F ixed Assets 20,858,929$ 20,317,857$ 19,776,786$ 20,835,714$ 20,294,643$ 19,753,571$ 19,212,500$ 20,500,000$ 19,958,929$ 19,417,857$
Total Assets 20,789,691$ 20,486,742$ 20,179,285$ 21,437,964$ 21,179,167$ 20,965,042$ 20,752,265$ 22,397,582$ 22,011,670$ 21,644,174$
Current LiabilitiesAccounts Payable 15,000$ 15,000$ 15,000$ 15,000$ 15,000$ 15,000$ 15,000$ 15,000$ 15,000$ 15,000$ Short-Term Bank Loan Payable 50,000$ 50,000$ 50,000$ 50,000$ 50,000$ 50,000$ 50,000$ 50,000$ 50,000$ 50,000$ Total Current Liabilities 65,000$ 65,000$ 65,000$ 65,000$ 65,000$ 65,000$ 65,000$ 65,000$ 65,000$ 65,000$
Long Term LiabilitiesLong-Term Notes Payable 80,497$ 86,131$ 92,161$ 98,612$ 105,515$ 112,901$ 120,804$ 129,260$ 138,308$ 147,990$ Total Liabilities 145,497$ 151,131$ 157,161$ 163,612$ 170,515$ 177,901$ 185,804$ 194,260$ 203,308$ 212,990$
Capital:Owner's Equity 20,644,194$ 20,335,610$ 20,022,124$ 21,274,352$ 21,008,653$ 20,787,142$ 20,566,462$ 22,203,322$ 21,808,361$ 21,431,184$
Total Liabilities + Owner's 20,789,691$ 20,486,742$ 20,179,285$ 21,437,964$ 21,179,167$ 20,965,042$ 20,752,265$ 22,397,582$ 22,011,670$ 21,644,174$
Belmont EstatePro Forma Balance Sheet Projections
December 31 2008 - 2017
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Table 4.5 Pro Forma Cash Flow Projections – 2008 – 2017
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017Cash Inflow
Income 989,000$ 1,159,750$ 1,363,633$ 1,607,693$ 1,900,571$ 2,236,028$ 2,636,040$ 3,024,606$ 3,190,979$ 3,377,202$
Cash OutflowTotal Expenses 1,675,812$ 2,176,877$ 2,682,187$ 1,661,117$ 2,205,889$ 2,748,085$ 3,357,971$ 2,092,764$ 2,636,001$ 3,180,038$ Depreciation (541,071)$ (1,082,143)$ (1,623,214)$ (564,286)$ (1,105,357)$ (1,646,429)$ (2,187,500)$ (900,000)$ (1,441,071)$ (1,982,143)$ Principal Payment 80,497$ 86,131$ 92,161$ 98,612$ 105,515$ 112,901$ 120,804$ 129,260$ 138,308$ 147,990$
Total Cash Outflow 1,215,237$ 1,180,865$ 1,151,133$ 1,195,443$ 1,206,046$ 1,214,557$ 1,291,275$ 1,322,024$ 1,333,238$ 1,345,885$
Cash Position (226,237)$ (21,115)$ 212,499$ 412,250$ 694,525$ 1,021,471$ 1,344,765$ 1,702,582$ 1,857,741$ 2,031,317$
Belmont EstatePro Forma Cash Flow Projections
December 31 2008 - 2017
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CHAPTER V: SUMMARY AND CONCLUSION
Belmont Estate has positioned itself to maintain the position of industry leader in the agri-
tourism sector in the Caribbean and to be further recognized as a world leader. The core
agricultural business has set the foundation for the tourism business, and given a platform for
the grounding of several enterprises within this business that merge to create a unique agri-
tourism product.
Belmont Estate has clearly defined it vision and mission and core values, and has put in place a
strategic plan for the future, that will result in it achieving its goals. The objective is not only to
earn the position of competitive advantage but to sustain it for the long term. To sustain this
position Belmont Estate must differentiate itself from the competition by developing and
maintaining exceptional buyer utility, ensuring that pricing meets demand of customers,
developing and maintaining new and innovative products, services & programs, and exceeding
customers expectations by giving our customers value that they can receive no where else.
There are several challenges that Belmont Estate faces, many being caused by external factors.
These factors like government policies, natural disasters, economic conditions at domestically
and internationally, the strength of the U.S. dollar, world food crisis, threats of terrorism may all
affect agricultural and / or tourism enterprises. Belmont Estate is beginning to position itself to
better address these uncertainties by putting special strategies is place. For example, developing
our product more in line with the desires of our local customers, and marketing hard at home to
develop a strong local customer base, will soften the impact of external conditions that could
result in a decease of international business. Growing more diverse food products to gain self-
sufficiency for the restaurant, and the product, and establishing a food security program, also
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insulates the impact of the world food and economic crises. Belmont Estate must continue to
assess the challenges and risks associated with the business and put regimes in place to prevent
or handle them.
I am happy to be in a position to steer this business to prosperity, upholding the legacy of my
grandparents and making a valuable contribution to our shareholders, employees, community
and nation at the same time. The completion of this Agri-business degree has brought real value
to me in term of business management, and strategy, that I will be able to utilize in moving the
company to its new strategic landmark and financial goals.
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